Transcription (this transcription was generated by AI; for any discrepancies, refer to the recorded podcast):
Dan Hood (00:03):
Welcome to Only Air with Accounting Today. I'm editor-in-chief Dan Hood. Change that stretches across decades can be hard to grasp, in part because very few people have direct experience of more than a small slice of the time involved. This is particularly true of the role of modern technology and accounting, which has been changing significantly since let's say the 1970s. I could probably go a little further back and you could probably pull it a little further forward, but it's been a long time and it's had some big changes along the way. One of the few people with a serious long-term view of accounting technology, and I should say not just accounting technology, but accounting, is Rene Lacerte. He's the CEO and founder of Bill. He's a serial tech entrepreneur in the accounting space since the early '90s. And since this year is the 20th anniversary of Bill, we're lucky to have him join us to share his perspective on the past of accounting technology and its future.
(00:46):
Rene, thanks for joining us.
Rene Lacerte (00:48):
Thank you, Dan, for having me. Looking forward to the conversation. A lot has changed and there's a lot of opportunity in front of us.
Dan Hood (00:54):
Yeah. Well, like I said, and those of you who know Rene, he's not like he's a doddering old man crawling along on a wheelchair or anything like that, but you have been around Tom. I don't want to predict present you as some sort of geezer. You have been around for a long time and are still super, super, super at the forefront of accounting technology. So I don't want anyone to think that this is a retrospective. We're going to be talking about the future as well. But you have had a vantage on the accounting profession in one way or another, pretty much all your life. And there's a little background we might get into in terms of your family's involvement in the profession and the technology, the professional users and all that sort of stuff. But maybe we'll actually, we should start with that just to let people clue people in on that.
(01:32):
Maybe you can give us a little background there.
Rene Lacerte (01:34):
Yeah. I mean, I think literally I was born into the business. So the night I was born, my mom was sorting punch cards for a GL payroll job that was the largest defense contractor in DC that had been sourced by the largest accounting firm in DC. So not much has changed in 59 years where I still work with accountants. I believe in the value that they add and create and the opportunity to serve them is one of the greatest things I get to do at Bill. And I believe that technology's always an enabler for business to get further, get farther. And so I think that's the opportunity. And so when I say that, I talked about being born to sorting a bunch of punch cards. I think you can kind of step back and see how the industry has changed. So before data processing, accountants were everything to the business.
(02:22):
The ledgers, the books, I mean, books were written about accountants. You can think about the Christmas story or whatnot. There's a lot of accounting that takes to actually make the society run and all of it was done manually. And then technology came and I think the many processors, the data computers that came from a server perspective started this transition to taking some of the mundane work away from accountants. But eventually there was a bit of a, I would say, a push into taking all of it away from accounts. And so what I've been working hard to do over the last 20 years of bills to give it back to accounts. I think accounts, when they got the data, they give better advice than anybody else. Businesses need help. This is a challenging ... Every time's a challenging time because building a business is challenging. And I've seen that with my parents, my grandparents, with all the companies I've helped serve.
(03:12):
It's hard to build something and accounts are kind of the cornerstone, I think, and advice when it comes to a business that's growing and starting and really having to have challenges addressed day-to-day. So anyway, so that's why I support accounts, that's why I've seen technology change how accountant's role plays in the business's life. And I think it's going to change for the positive with what I see coming with AI.
Dan Hood (03:39):
Right. Well, that's a huge topic. We're going to dive into that and more of the future. I want to stick with a little bit of the past. Like I said, you're one of the few people who has this long viewpoint of across the profession from literally birth, but perhaps more importantly or more memorably since the early 90s when you started working with accountants in payroll and so on. Maybe talk about some of the specific changes you've seen either in the profession as a whole, not necessarily related to technology, but then you've been in relation to technology because you say there's been that sort of pendulum back and forth of technology taking work away, but then bringing it back and that's been attention. What other changes, major changes have you seen over those
Rene Lacerte (04:21):
Decades? Yeah. I mean, this is somewhat simplistic, but I think if you go back to before data processing, the accountant was the financial expert that the business needed. And then data processing and then the move to desktop software,
(04:37):
Even web-based software pushed accounts to be IT and tech support as much as financial expert. And they do a great job, but that is not what they want to be doing. It's not their most unique advantage. And what I see happening now, what we've done with our client advisory services practice that we've worked with CPA.com to build and what we see across close to 10,000 firms is that technology, when you can actually bring it along, it can actually support the profession in a way that wasn't there before. And so if you think about the do- it-yourself approach, which is what QuickBooks desktop is, you go ab at it, accountant gets to clean up the mess at the end of the year. I mean, nobody wants to clean up a mess. It's just not something fun to do. Two, an approach that we developed using cloud-based capabilities where we say it's going to be a do it with you approach.
(05:28):
We're going to help your clients actually get that information in so you don't have that painful part to do and puts you in a position to offer strategic or client accounting services. So that's the client advisory services that everybody is talking about how accountants are actually, their profession is growing very strongly from the advice and strategic services that they can offer in this bespoke environment that we have right now where you have technology that enables an accountant to do their best work versus a technology that asks an account to be an IT person, which nobody wants. Not
Dan Hood (06:03):
Even IT people want to
Rene Lacerte (06:04):
Be able to do that. I just say that. No events that IT people, but I mean, no accountant wants to do
Dan Hood (06:07):
That. Even then they're like, "Oh, I'd rather be a movie star." But it's interesting because you talk about that change in technology where it went from ... And there were programs that would literally lock the user out of a program for at the last day of the month so that the accountant could go in and clean it up and the client couldn't go in and make more mistakes. But all that, getting the set of books at the end of month and being like, "Oh, what is this nightmare going to be? " To now, the cloud has a huge, just among the many changes you highlighted there, the cloud has made that the ability to work with your clients on a database and to prevent the mistakes almost before they're made, if not entirely before they're made, has been enormous. There's been a ton of other changes.
(06:47):
One way to look at these, and I mentioned earlier, it was Bill's 20th anniversary. Maybe let's dive specifically into Bill and talk a little bit about where it started, why it started, and then how it's changed over time. Obviously, it's been knee deep or neck deep in all of these sort of technology changes. It became of age in the era as accountants were starting to really adopt the cloud, et cetera, et cetera. Maybe take us through that journey.
Rene Lacerte (07:10):
I think, yes, great question. So I think one of the things that the cloud has done and I think AI will accelerate is the ability to peel back the layers of financial operations. So if you think about desktop software, everything that accounting and tax related, it was all about, "Hey, these are transactions. They're recorded transactions. We do a calculation and we go on to the next thing." It wasn't able to go down and say, "Well, what really underlies that transaction?" And so what we've done is there's workflow, there's documents, there's data entry. These are all things that lead up to a transaction in a GL and we've started peeling that onion, that layer back, if you will, so that we can have all that automated so the account can actually focus more on, "Hey, what does this transaction mean for the business versus how do I execute the transaction?" When we started, our workflow wasn't as robust.
(08:01):
It's now very robust. We have obviously workflow across all the employees. We have workflow across accountants, we have workflow across customers and buyers. So there's opportunity on workflow. We have data entry today that does, and it's beginning we would've said a few years ago, we would call it machine learning and now I would say it's at the level of AI where we can actually read information pretty quickly and help customers and accountants actually have the data they need to make decisions. And then we've also added payment capabilities. And so one of the things that is part of the financial operations layer is that you have to make payments. And so the dominant form of payment might be a check, which in our case is now at ACH because we do that so well, have over eight million on our network because we make it really easy to connect, get paid that way.
(08:49):
But we have 11 other payment modalities. We do international payments. We obviously do FX payments, do virtual card payments. We do all sorts of different payment transaction capabilities so that the business can stay focused on running their business and not worrying about how people are getting paid. And that obviously lightens a load for accounts when they can let people get back to their work and they can focus on strategic advice. So one of the things that we've added over the last 20 years is expanding what is the payable side of the business. So we now include spending expense. So if you think about your card, one of the things we realized the reason we got into that is one of the biggest expense payable items was the corporate card at the end of the month. And so we got into that ability for us to be able to bring that spend with the same type of controls that we have.
(09:40):
So the other thing that's changed over time is once you have all these workflows, you can create controls that actually helps protect you from fraud, from overspend, from all the different things. When an accountant comes in, they can actually help set up those controls so their businesses are in a much better position and don't have any surprises at the end of the month or quarter of the year. And so what we've seen is by looking at spend overall and bringing that all together into one platform, we've created a really unique opportunity for accountants to actually get out of the mess and get into the strategic advice that they want to be offering, that they should be offering. So a lot of change and there's obviously more to come.
Dan Hood (10:18):
Right. Well, I mean, one of the things is we've obviously been paying attention to Bill's growth over the years and one of the things we constantly sort of saw was a couple of different things. One was the expanding the specific offerings, the different capabilities you had for accountants to operate within Bill, but also expanding the number of other vendors and other programs and other workflows that you guys are integrated with to the point where you sort of sit at this central hub of a lot of what a huge amount, if not all of it, in some cases, of what accountants need to do with their clients. So that you now sort of, you need to do that. Yeah, either we do it ourselves or we work with all the programs that do it or one way or another, you're centralized to all that workflow.
Rene Lacerte (10:58):
Well, I've been to many a conference where I have accounting firms say the first thing you have to do is get on bill and then we figure out the accounting software, whether it's Xero or Intact or Intuit or NetSuite. The important thing is you want that layer underneath the transaction. That's where the controls need to be. That's where you have to have insights into how people are spending, whether that's a corporate card or whether that's an AP item. You need to have controls around that. You need to be able to see it, you need to reconcile it, you need to obviously sync it with the accounting software. I mean, I think it's because we do all that, that over $1 trillion of spend has gone through Bill. It's over 1% of GDP on an annualized basis today. It's close to half a million businesses. It's all those things that we do that create the value and allow accountants, like I said earlier, to really get back to being a strategic advisor to the businesses that they serve, which is far more interesting and actually far more sustainable when you move into more and more technology doing things for us.
(11:55):
So I think that's something that we've been very focused on doing is how do we help accountants leverage their expertise by being experts in this layer underneath the transaction, which is what we've done.
Dan Hood (12:07):
Right. I keep going back to this. It's fascinating because I think it's one of those things where a lot of people assume, and I think including the general ledger vendors themselves had thought that it would be an accounting program that would occupy that sort of central position when it really turns out that it's bill, that that's where so much of that information is centralized and that's one of the things that gives accountants that ability too. Yeah.
Rene Lacerte (12:30):
And I think so you'd asked earlier and I didn't answer, so I'm going to go back to the start of the company. So part of what was interesting for me is I'd worked as an accountant at Pricewaterhouse and had done three years of work auditing companies up and down the East Coast. Then I worked at my parents' payroll company. Then I was at Intuit where I built a lot of great solutions for small businesses, especially payroll solutions. And so when I started the first company, what I found is I didn't want to go in the GL to actually manage my business. I actually wanted to look at the bills, the checks I was signing and the invoices I was collecting on. I wanted that personal relationship that happens with a buyer, supplier, like a buyer customer or whatever. Those things, that's so important to have that connection.
(13:15):
And that's what I wanted Bill to do was to actually create that ability to have that connection seamlessly without having to think twice about it and then integrate it with the accounting because you do need to have the accounting transpire so that you can actually get an overview of the business. But day-to-day, it's that connection with your buyers, with your customers, with your suppliers. Those are the things that you really need connection to.
Dan Hood (13:40):
A final question in this area, and you've touched on a lot of it. I want to talk about the way in which the way accountants and accounting firms work and how that's changed, you've touched on a lot of aspects in this, the sort of immediacy to be able to be in the client's business twenty four seven, not having to wait till the end of the month when they send the miserable file full of mistakes to you. So that sort of real-time interaction with clients and then depending on how you're doing it, but whether you're running it for them or just looking over their shoulder as they try new things. But then also some other aspects of it is that in theory, at least in a great position to move, as you say, to free focusing more on the advisory stuff because a lot of the sort of basic work is being done for them by technology and they can just oversee it and get the insights from it.
(14:30):
Are there other areas, other ways in which you're seeing how accounts work and how accounting firms work change? Well,
Rene Lacerte (14:36):
I definitely, I mean, if we just take the tax business, if you think about before Lacerte Tax and other TurboTax and those products, accountants were kind of busy inside of the regulatory paperwork to try to understand things. And now I think about my relationship with my tax accountant, I get strategic advice. This is how you can think about your tax burden and your bill and how to manage that. And so I think we're going to see the same thing and are seeing the same thing with the underlying financial operations. And this is the client advisory services that I think have really changed. Consistently, it's the fastest growing part of any accounting practice. And so as technology is enabling and taking away some work, it also does enable more strategic thinking, which I've shared this, but I see it. I see it in how accounts are able, and I gave the tax example because that's just personal, but I see it how accountants are able to come in, be able to help a business think about how they're spending, how they're collecting on the invoices they have, how they're thinking about their T&E budget, all those things.
(15:49):
It needs to be simple so they can be strategic. And I think what we're going to see is as the data continues to get solidified into a data set that's reliable, accountants will be in a better position to leverage their expertise across all their clients. I mean, let's step back. One of the great things about being an accountant is that you serve lots of clients. That means you get to learn from every one of them and every one of them's going to be different. Now, sometimes it'll be industry vertical specific. Sometimes it'll be management. Sometimes it'll be somebody that you're talking one client just went through a growth spurt. Another one is getting ready to do that. So how do you manage that? What recruiters? I mean, these are all things that accounts get exposed to when they see a lot of money going out for something, then they can start asking around.
(16:35):
So anyways, I think that advice is something that is, to me, it's exciting because you have to understand the whole business to be able to give it and accountants do understand the numbers and they understand the people and they build relationships. And it's back to one of the things that I think that's most valuable for accounts is that they are trusted. And I think we've seen this and talked about this before outside of, and I think they're more trusted than a financial institution, but outside of that, these are the professions that people trust and you trust your accountant. And that trust is going to continue to mean that's where people go for the strategic advice that they want.
Dan Hood (17:12):
Right. Well, it's interesting. I think our next guest should be your accountant and your tax provider if they're giving you that kind of advice. And I think a lot of accountants understand that intellectually, but don't know how to turn it into real advice on the ground. They know, oh, I've got all the data and I've got all the insights in my head, how they put together and take it to the client. So I say, well, we'll get your advisors in here to give them a class. And sounds like they're giving you what you need and what a business owner would want. Excellent. All rig. We've talked a lot about what went before and how the profession has changed. As you've been watching it, I want to sort of pivot a little bit and look forward and see what's coming up, but before we do that, we're going to take a quick break.
(17:53):
All right and we're back. We're talking with Rene Lacerte from Bill. We've looked back over the last couple of decades and how accounting has changed. And I think the summary is a lot, particularly technology has caused it to change and it has changed in reaction and so on. But I want to look forward and maybe one place to start here is to move away from accounting specifically and to talk more about the technology industry as a whole. You have obviously, on the one hand, huge insights into what accountants are up to, but you're also a tech company. So how do you see going forward? How do you see the technology industry overall changing? I should point, Bill recently had a big announcement about its AI focus going forward. That's obviously a huge player going on there, but overall, how do you see the tech industry changing?
Rene Lacerte (18:39):
It's a really great question. I think technology from the invention of the wheel has always made life simpler for humans. And that's always the goal and it's usually what happens. And what I see happening from a software perspective is that we went from the days that I was born to a very thin software interface. It was punch cards. It was cards with holes in them to indicate ones and zeros. That is no software interface. Nobody could read that card and know what it was saying very easily to a very thick client interface. You think about all the desktop applications, it's trying to actually guide you and do all these things, but you still have to know how to get there. We're going to go back to a thin client and it's going to be worked with any AI tools, whether it's Gemini or whatnot, you just ask questions, which by the way, from a human perspective, if you think about human curiosity over time, that is one of our greatest strengths.
(19:37):
Let me just go ask questions. And so that becomes a very different experience. When you're designing software, you still need structured data. I don't think anything should be unstructured. I mean, you can take the LM models and they can kind of keep structure out of unstructured fairly easily, but then you can get a lot more if you start structuring that over time. You can have patterns that are more easy to see, but the interface to that will be very different. And so what I see is that as that work becomes more and more reliable, that mundane layer of financial operations, which is where I care and focus on, that goes away, whether that's the layer the accountant was doing or the client was doing. That layer goes away and you get into insights, which I think is going to be back to the strategic advice capability that accountants have.
(20:24):
They will be seeing all of this across all their clients. And that's something that we should, the profession has always had an advantage of having this holistic view of the economy, even if it's a microeconomy in their area, that view is super important when you're trying to offer strategic advice. And so I think that this thin client will just mean a lot more opportunity to be curious and curiosity is a great way to build new things that actually change the world for the better. And so I think that's what I'm excited about. And so what we've done at Bill is we've pivoted our positioning from an external perspective to be very clear that we are building an AI native company. And so all the great capabilities that we have, we're going to support those capabilities, but I'm asking the teams for anything new that we're doing, think about it like you thought about it today versus 20 years ago.
(21:15):
Do not be encumbered by the practice. And that would be my suggestion to accounts is like, when you think about the next 20 years, do not be encumbered by what you've already done, be thinking about how AI can change your practice and your engagement. Simple things about how you become more efficient in your day-to-day job to more complex things about how you help your clients. AI is a very powerful tool. It takes time to learn how to use it, but it is something that I think will create a much different conversation all around curiosity, which is what I love. I love actually being curious and honoring that human capacity to kind of take on new projects and ideas just because of that.
Dan Hood (21:57):
That makes a ton of sense. I mean, I think it's one of the fascinating things for accountants is for so much of their existence as a modern profession up to including fairly recently so much of their time was spent creating the information or codifying it or cleaning it up or putting in format that they didn't really have time to digest it in the sense of to get the insights out of it. And you've made the point a couple of times that if someone else is taking care of that for you or making it much easier for you, suddenly you can spend a lot more time focusing on those insights, developing them. But I think some of it goes to the need for curiosity, the willingness to spend the time to think about it. But maybe what are the things your accountants need to be doing to make the most of this technology?
(22:41):
Are there attitude changes that need to happen? Are there structural changes within firms or the way they do their work? When you look out at your user base, for instance, I don't want you to say anything bad about your user base, but when you look out across them, are you saying, "Hey, you know what? If they really wanted to get the most out of what we're offering and what other software creators are offering, how do they need to change or do they need change?" But I shouldn't assume that they need to change.
Rene Lacerte (23:03):
Yeah, no, we all need to change. I mean, change is a constant life and we have to change. That's the way we make progress and actually do more to help other humans, which I think is one of the most important things. To think about what accounts do, that's what they're doing. They're helping other humans. So I think one of the ways that we have to change is that how we activate that curiosity that we talked about. So over the weekend, I had a strategic question that I wanted to think about for the business. And so I went into Cloud and I was asking questions away, how to do a bunch of analysis. I compared this to that, but I had to be on it. Its first pass was not great. It was there. I mean, I've said for 20% of the effort, you get 80% of the work.
(23:50):
And so you get a bunch of value with that 80%, but it's not 100% and that's where the curiosity comes in. That's where you have to really refine and say, "Hey, that doesn't make sense." You have to check the math. We talked about how accountants are one of the most trusted, if not the most trusted profession. And that means that when you're using AI, you are that trust gate. You have to actually be the curious person that's checking and validating the work. Now your ability to do that, you can use AI to do that, but you just always have to be checking and saying, "Hey, that doesn't make sense. Do another cross-examine analysis." You have to be able to have that constant flow. I think the risk I would say is if you just trust AI to do the work, you'll get a lot more done, but you should never take the first version, at least that's been my experience.
(24:38):
You have to keep pushing and saying, and you're just learning how to ask questions. And this was true with the internet. With Google, you get better searches as you learn how to ask the right questions. And it's totally true with AI. Just be persistent, don't trust it, trust your own instincts and keep pushing.
Dan Hood (24:57):
Right. Some variation of trust, but verify. I mean, right now the hard part is the trust, but later on it's going to be the verify thing. So I think as AI, particularly as AI gets better, more and more people will be saying, "Oh, it's great. I get all my answers from cloud." I mean, I think tax pros in particular are complaining already that people are going on to various AIs and asking for tax advice and it's terrible. It's actually wrong. And after time that will go away, people will be like, "Yeah, you can trust it, " but someone will still need to say, "Hey, hey, no, you got to double check it, make sure it still works."
Rene Lacerte (25:32):
Yeah. And this is why I say, so I'm reminded in school, 20% of the effort would get me a B and it took another 80% to get the A. And maybe that analogy is not exactly right, but I think the concept makes sense. And so AI is going to get you that B level work very quickly. I honestly believe that, but the expertise that accounts have developed over their whole career is what's going to actually take it to an A and it's going to be such a different A than we've ever seen. The bar's just going to keep getting raised on what expectations and performance means when you're an accountant, when you're a professional. And that's a good thing because you're going to be using more of your brain. It's going to be more of your creativity. It's going to be more of your curiosity.
(26:10):
It's going to be less of the mundane, boring stuff that trips all of us up. Nobody should ever have to do math so to speak, but everybody should be able to do math. Two plus two is always going to be four. So I don't know why I need to add it over and over again. But that capability, that expertise to be able to look at something and see it, that's going to be the value that accountants have. So I think really leaning into your strengths, your individual strengths and pushing that across the practice is going to be the thing that I would encourage accountants to do.
Dan Hood (26:41):
Excellent. All right, great advice for them. Any final thoughts on the 20th anniversary of Bill and as we're on the ... I won't say the verge because it's already become more on the verge of a pretty huge, I think, change in how everybody works and how everybody thinks and how software works and how everybody uses software and so on with as AI gets better and better and better. Any thoughts for the future? Anything you think people ought to be thinking about as they look ahead?
Rene Lacerte (27:06):
So yeah, definitely. I think one of the things that people have raced over is because so much work can get done so quickly, people assume that humans aren't needed. And what I've talked about, if you just think about software development, at the core of good software development is a product manager and a product manager is always asking questions about what could be better. And I'm not saying that AI doesn't do that, but it's the expertise that a person develops over their life talking to customers, talking with accountants in my case, understanding business, seeing different scenarios unfold in ways that you don't expect that allow you to ask questions in a way that's uniquely qualified to keep building a better and better product. So when people say, "Oh, well, you're going to just be able to go to AI and say, do my taxes." That's not true.
(28:01):
At the core, an accountant is a product manager of taxes. They should be thinking about, how do I help my clients pay what they need to pay, but also not pay what they don't need to pay? How do I think about that? And that is going to be expertise that never is actually captured is always going to be advancing. And that's my belief and that's this nature of at the heart you're a product manager, you keep building stuff. So I think be thinking about the advice I would have to close with is AI is a great advocate and a great tool to actually extend your expertise. And if you embrace it and think of it that way, you'll have a much different experience. And we do see the firms that are already embracing it, they're kicking butt. 87% of firms believe in AI, but a smaller percentage are using it to transform and they're getting two to 3x the outcomes that others are.
(28:54):
So committing to understanding how to leverage it is going to be something that's going to be super, super important.
Dan Hood (29:01):
Yeah. I mean, I think it's spectacular advice, but it's always worth running. This is not going to be handed to you. You're going to have to go out and learn it. It is a set of skills and a set of tools that will be enormously important, as you say, if you embrace. Fantastic. Great advice. Rene Lacerte of Bill, first off, congratulations on the 20th anniversary, but thank you so much for joining us and sharing all your thoughts.
Rene Lacerte (29:20):
Well, thank you, Dan. Always good to talk to you and I really appreciate the time and congratulations. So thank you.
Dan Hood (29:26):
Yeah, cheers. And thank you all for listening. This episode of On the Air was produced by Accounting today with audio production by Adnan khan. Ray to review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest and thank you for this.
